EXHIBIT 10.Q
KU ENERGY CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN
Effective May 1, 1992
ARTICLE I
Purpose
The KU Energy Corporation Director Deferred
Compensation Plan (the "Plan") is hereby established, effective
May 1, 1992, to provide eligible directors of KU Energy
Corporation with the opportunity to defer some or all of the
compensation which may be payable to them for services to be
performed as members of the Board of Directors of KU Energy
Corporation.
ARTICLE II
Definitions
The following words and phrases shall have the meanings
set forth below unless a different meaning is clearly required by
the context:
(a) Account: The account maintained for each
Participant showing his or her interest under the Plan as
provided in Section 4.1.
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(b) Accounting Date: Each March 31, June 30,
September 30, and December 31 of each calendar year. The first
Accounting Date under the Plan shall be June 30, 1992.
(c) Beneficiary: The person or persons (natural or
otherwise) designated, in accordance with Section 5.4, to receive
the distribution of a Participant's Account balance in the event
of the Participant's death.
(d) Board: The Board of Directors of the Company.
(e) Change in Control: A change in control as more
fully defined in Section 5.6.
(f) Committee: The Compensation Committee of the
Board.
(g) Company: KU Energy Corporation, a corporation
organized and existing under the laws of the Commonwealth of
Kentucky.
(h) Compensation: Any retainer and meeting fees
payable to the Director by the Company for services rendered as a
member of the Board or any committee thereof.
(i) Director: Any member of the Board on or after the
Effective Date who is separately compensated for his or her
services as a member of the Board.
(j) Effective Date: May 1, 1992.
(k) KU: Kentucky Utilities Company.
(l) Participant: A Director participating in the Plan
in accordance with the provisions of Section 3.2, or a former
Director whose Account balance under the Plan has not been paid
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in full.
(m) Plan: The KU Energy Corporation Director Deferred
Compensation Plan set forth in this instrument, as it may be
amended from time to time.
(n) Service: An individual's service on the Board and
on the boards of KU or other any Subsidiary.
(o) Subsidiary: An entity in which the Company, KU or
one or more other Subsidiaries directly or indirectly bene-
ficially owns 50% or more of the voting securities.
ARTICLE III
Eligibility and Participation
3.1 Eligibility: Each member of the Board who is a
Director on the Effective Date shall be eligible to participate
in the Plan as of the Effective Date. Each other Director shall
be eligible to participate in the Plan as of the first day of the
month next following the date he or she becomes a Director.
3.2 Participation: A Director may elect to
participate in the Plan effective as of the date the Director
first becomes eligible to participate as provided in Section 3.1,
or effective as of the January 1st of any calendar year beginning
after such date, by filing written notice of such election with
the Company prior to the effective date of such election. Such
notice shall be accompanied by (i) an election to defer
Compensation as provided in Section 3.4 and (ii) an election as
to the method of payment as provided in Section 5.1. Upon filing
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such election notice, the Director shall become a Participant in
the Plan effective as of the date elected as permitted in this
Section 3.2.
3.3 Crediting of Compensation: Commencing on the
effective date of a Participant's participation in the Plan and
continuing during the period that Compensation is to be credited
to the Participant's Account under the Plan, the Company shall
defer payment of and credit to the Participant's Account all or
such portion, as elected by the Participant under Section 3.4, of
the Compensation that the Participant would have received for
services rendered by the Participant during such period as a
member of the Board but for his participation in the Plan, such
credits to be made as provided in Section 4.2(a).
3.4 Election to Defer: At the time a Director elects
to become a Participant, the Director shall elect to have from
10% to 100%, in specified multiples of 10%, of his or her
Compensation for services rendered subsequent to the date the
Director becomes a Participant deferred under the Plan and
credited to his or her Account as provided in Section 3.3. Such
election shall remain in effect until changed or terminated as
hereinafter provided.
A Participant may change his or her election under this
Section 3.4 effective as of the January 1st of any calendar year
with respect to Compensation for services to be rendered as a
Director on or subsequent to such January 1st, by giving the
Company written notice of such change at least 15 days prior to
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such January 1st. Any change may (i) increase or decrease,
within the limits prescribed in the preceding paragraph, the
portion of Compensation to be deferred and credited to the
Participant's Account as provided in Section 3.3, (ii) terminate
an election to defer Compensation under this Section 3.4 or
(iii) resume the deferral of Compensation under the Plan within
the limits prescribed in the preceding paragraph. A change in
the portion of Compensation deferred or the termination of a
Participant's election to defer Compensation shall not entitle
the Participant to receive payment of his or her Account balance,
which shall be payable only as provided in Article V.
Any election or change in election under this
Section 3.4 shall be made on a form provided or prescribed by the
Company.
ARTICLE IV
Participants' Accounts
4.1 Individual Accounts: A separate Account shall be
maintained by the Company on its books for each Participant.
4.2 Accounting Procedures: Each Participant's Account
shall be adjusted as of each Accounting Date as follows and in
the following order:
(a) Each Participant's Account shall be
credited with the amount of Compensation to
be credited to his or her Account as provided
in Section 3.3 during the calendar quarter
ending on such Accounting Date. Credits
shall be made as of the last business day of
the respective calendar months in which such
Compensation would have been paid to the
Participant by the Company but for his or her
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participation in the Plan.
(b) Each Participant's Account shall
next be charged as of such Accounting Date
with the amount of any distributions under
the Plan to the Participant or to his or her
Beneficiary effective as of such Accounting
Date.
(c) Unless (i) a Change in Control has
occurred during the calendar quarter ending
on such Accounting Date and the last
paragraph of Section 5.1 is applicable to the
Participant or (ii) a Participant has
terminated his Service during the calendar
quarter ending on such Accounting Date and
Section 5.5 is applicable to the Participant,
each Participant's Account shall next be
credited with the amount equivalent to
interest to be added to the Participant's
Account as of such Accounting Date. The
interest equivalent to be credited as of an
Accounting Date shall be equal to the
interest that would be earned on the average
of the balances in the Participant's Account
at the end of each calendar month during the
calendar quarter ending on such Accounting
Date, at a rate per annum which equals the
average prime rate charged by banks as
reported in the Federal Reserve Bulletin
published on or next prior to such Accounting
Date.
ARTICLE V
Distribution of Benefits
5.1 Termination Prior to a Change in Control For
Reasons Other Than Death: Within 15 days after the Accounting
Date coincident with or next following the date on which the
Participant terminates his or her Service prior to the date on
which a Change in Control occurs for any reason other than death,
the Company shall pay, or commence to pay, to the Participant in
cash the amount credited to his or her Account. Payment shall be
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made in accordance with Payment Method I, Payment Method II or
Payment Method III, below, as elected by the Director at the time
the Director elects to become a Participant:
(a) Payment Method I - By payment in a
lump sum of the amount credited to
the Participant's Account as of the
Accounting Date coincident with or
next following the date on which
the Participant terminates his or
her Service.
(b) Payment Method II - By payment in
quarterly installments, the number
of which shall be the lesser of
(i) 40 or (ii) the aggregate number
of full calendar quarters during
which compensation was credited to
the Participant's Account under the
Plan and to his or her account
under any similar plan of KU or
other Subsidiary (but not counting
any such calendar quarter more than
once). The amount of each install-
ment shall be equal to the quotient
obtained by dividing the balance
credited to Participant's Account
as of the Accounting Date coin-
cident with or next preceding the
date of such installment payment by
the number of installment payments
remaining to be made to such
Participant at the time of such
calculation.
(c) Payment Method III - By payment in
annual installments, the number of
which shall be the lesser of (i) 10
or (ii) the aggregate number of
full calendar years (but not less
than one) during which compensation
was credited to the Participant's
Account under the Plan and to his
or her account under any similar
plan of KU or other Subsidiary (but
not counting any such calendar year
more than once). The amount of
each installment shall be equal to
the quotient obtained by dividing
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the balance credited to Partici-
pant's Account as of the Accounting
Date coincident with or next
preceding the date of such install-
ment payment by the number of
installment payments remaining to
be made to such Participant at the
time of such calculation.
An election under this Section 5.1 shall be made on a form
provided or prescribed by the Company and once made shall be
irrevocable.
Notwithstanding a Participant's election under, or the
foregoing provisions of, this Section 5.1, if a Change in Control
occurs after a Participant terminates his or her Service but
prior to the complete distribution under the Plan of the balance
credited to his or her Account, the amount credited to the
Participant's Account as of the date the Change in Control occurs
increased by the amount of any Compensation deferred under the
Plan by the Participant subsequent to the Accounting Date on or
next preceding the date on which the Change in Control occurs
(the "undistributed amount"), plus an amount equivalent to
interest as provided below, shall be paid in cash in a lump sum
to the Participant (or, in the event of the Participant's death
after his termination of Service, to his or her Beneficiary)
within 15 days after the date on which the Change in Control
occurs. The interest equivalent to be paid pursuant to the
preceding sentence shall be equal to the interest that would be
earned on the undistributed amount during the period from the
Accounting Date on or next preceding the date on which the Change
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in Control occurs to the date of distribution, at the rate per
annum used under Section 4.2(c) as of the Accounting Date on or
next preceding the date on which the Change in Control occurs.
5.2 Death: Upon the death of a Participant, whether
before or after termination as a member of the Board, prior to
the complete distribution of the balance credited to his or her
Account, any undistributed amount credited to the Participant's
Account as of the Accounting Date coincident with or next
following the Participant's date of death shall be paid in cash
in a lump sum to the Participant's Beneficiary within 15 days
after such Accounting Date; provided, however, if a Change in
Control shall occur either before or after the Participant's
death but prior to the complete distribution of the balance
credited to the Participant's Account, distribution shall be made
to the Beneficiary as provided in the last paragraph of
Section 5.1 or in Section 5.5, whichever is applicable, rather
than as provided in this Section 5.2.
5.3 Hardship Distribution: With the written consent
of the Committee, a Participant may withdraw from his or her
Account as of an Accounting Date a cash amount not in excess of
the balance credited to the Participant's Account as of such
Accounting Date. The Committee, in its sole discretion, may
consent to such withdrawal but only if the withdrawal is
necessary, upon demonstration by or on behalf of the Participant,
because of a substantial financial hardship of the Participant as
a result of accident, illness or disability. The Committee, in
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its sole discretion, shall determine the amount of such a
distribution that is needed to meet the need created by the
hardship. Any such distribution shall be charged to the
Participant's Account.
5.4 Beneficiary: As used in the Plan, the term
"Beneficiary" means:
(a) The last person designated as
Beneficiary by the Participant in a written
notice on a form prescribed by and filed with
the Company;
(b) If there is no designated
Beneficiary or if the person so designated
shall not survive the Participant, such
Participant's spouse; or
(c) If no such designated Beneficiary
and no such spouse is living upon the death
of a Participant, or if all such persons die
prior to the full distribution of the
Participant's Account, then the legal
representative of the last survivor of the
Participant and such persons, or, if the
Company shall not receive notice of the
appointment of any such legal representative
within one year after such death, the heirs-
at-law of such survivor (in the proportions
in which they would inherit his intestate
personal property) shall be the Beneficiaries
to whom the then remaining balance of the
Participant's Account shall be distributed.
Any Beneficiary designation may be changed from time to time by
like notice similarly delivered. No notice given under this
Section shall be effective unless and until the Company actually
receives such notice and enters it in its records.
5.5 Termination On or After a Change in Control: If a
Participant terminates his or her Service on or after the date on
which a Change in Control occurs, the amount credited to the
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Participant's Account as of the Accounting Date on or next
preceding the date on which the Participant terminates his or her
Service increased by the amount of any Compensation deferred
under the Plan by the Participant subsequent such Accounting Date
(the "undistributed amount"), plus an amount equivalent to
interest as provided below, shall be paid in cash in a lump sum
to the Participant (or, in the event of the Participant's death,
to his or her Beneficiary) within 15 days after the Participant's
termination of Service. The interest equivalent to be paid
pursuant to the preceding sentence shall be equal to the interest
that would be earned on the undistributed amount during the
period from the Accounting Date on or next preceding the
Participant's termination of Service to the date of distribution,
at the rate per annum used under Section 4.2(c) as of the
Accounting Date on or next preceding the date of termination.
5.6 Change in Control: For purposes of the Plan, a
"Change in Control" shall have occurred if at any time any of the
following events shall occur:
(a) The Company or KU is merged or
consolidated or reorganized into or with
another corporation or other legal person,
and as a result of such merger, consolidation
or reorganization less than a majority of the
combined voting power of the then-outstanding
securities of such corporation or person
immediately after such transaction is held in
the aggregate by the holders of the then-
outstanding securities entitled to vote
generally in the election of directors (the
"Voting Stock") of the Company immediately
prior to such transaction;
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(b) The Company or KU sells or
otherwise transfers all or substantially all
of its assets to any other corporation or
other legal entity, and as a result of such
sale or transfer less than a majority of the
combined voting power of the then-outstanding
securities of such other corporation or
entity immediately after such sale or
transfer is held in the aggregate by the
holders of Voting Stock of the Company,
immediately prior to such sale or transfer;
(c) There is a report filed on Schedule
Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report or item
therein), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended
(the "Exchange Act"), disclosing that any
person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange
Act) of securities representing 10% or more
of the combined voting power of the Voting
Stock of the Company or the Voting Stock of
KU;
(d) The Company or KU files a report or
proxy statement with the Securities and
Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form
or report or item therein) that a change in
control of the Company or KU has or may have
occurred or will or may occur in the future
pursuant to any then-existing contract or
transaction; or
(e) If at any time during any period of
two consecutive years, individuals who at the
beginning of any such period constitute the
directors of the Company or KU cease for any
reason to constitute at least a majority
thereof, unless the election, or the
nomination for election by such company's
stockholders, of each director of such
company first elected during such period was
approved by a vote of at least two-thirds of
the directors of such company then still in
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office who were directors of such company at
the beginning of any such period.
Notwithstanding the foregoing provisions of paragraph
(c) or (d) above, unless otherwise determined in a specific case
by majority vote of the Board of Directors of the Company and KU,
a "Change in Control" shall not be deemed to have occurred for
purposes of the Plan solely because (i) the Company, (ii) a
Subsidiary or (iii) any Company-sponsored, KU-sponsored or
Subsidiary-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, KU or Subsidiary, either
files or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item
therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of Voting Stock of the Company or KU, whether in
excess of 10% or otherwise, or because the Company, KU or a
Subsidiary reports that a change in control of the Company or KU
has or may have occurred or will or may occur in the future by
reason of such beneficial ownership. Notwithstanding the fore-
going provisions of this Section 5.6, a "Change in Control" shall
not be deemed to have occurred by reason of the Reorganization.
'Reorganization' shall mean the corporate reorganization whereby
the Company became the holding company of KU as approved by the
Board of Directors of KU on May 16, 1988 and May 27, 1988.
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ARTICLE VI
Financing of Benefits
The Plan shall be a nonqualified and unfunded plan.
Benefit payments under the Plan shall represent an unsecured
general obligation of the Company and shall be paid by the
Company from its general assets. No special fund or trust shall
be created or held for the financing of benefits under the Plan.
ARTICLE VII
Facility of Payment
Whenever a person entitled to receive any payment under
the Plan is a person under legal disability or a person not
adjudicated incompetent but who, by reason of illness or mental
or physical disability, is in the opinion of the Committee unable
properly to manage his or her affairs, then such payments shall
be paid in such of the following ways as the Committee deems
best: (a) to such person directly; (b) to the legally appointed
guardian or conservator of such person; (c) to some relative or
friend of such person for his or her benefit; (d) for the benefit
of such person in such manner as the Committee considers
advisable. Any payment made in accordance with the provisions of
this Article shall be a complete discharge of any liability for
the making of such payment under the Plan, and the distributee's
receipt shall be a sufficient discharge to the Company.
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ARTICLE VIII
Administration
The Plan shall be administered by the Compensation
Committee of the Board. The Committee shall have such duties and
powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, to construe and
interpret the Plan, decide all questions of eligibility and
determine the amount and time of payment of benefits hereunder.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any
benefits provided under the Plan, or to waive or fail to apply
any requirements of eligibility for a benefit under the Plan. No
Participant who is a member of such Committee may vote on any
question relating specifically to himself or herself.
ARTICLE IX
Miscellaneous
9.1 Other Agreements. The Plan shall not affect in
any way the rights or obligations of a Director under any
deferred compensation or other agreement between the Director and
the Company or KU, including, but not limited to, the KU Energy
Corporation Director Retirement Retainer Program.
9.2 Successors. The Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or sub-
stantially all of the business and/or assets of the Company
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expressly to assume and to agree to perform this Plan in the same
manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Plan shall
be binding upon and inure to the benefit of the Company and any
successor of or to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all
of the business and/or assets of the Company whether by sale,
merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the
purposes of this Plan), and the heirs, executors and adminis-
trators of each Director.
9.3 Interests Not Transferable. No person shall have
any right to commute, encumber, pledge or dispose of any right to
receive payments hereunder, nor shall such payments be subject to
seizure, attachment or garnishment for the payments of any debts,
judgments, alimony or separate maintenance obligations or be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise, all payments and rights hereunder being
expressly declared to be nonassignable and nontransferable.
9.4 Amendment and Termination. The Plan may be
amended from time to time or terminated by the Board at any time,
but no amendment or termination may adversely affect the rights
of any person without his or her prior written consent.
9.5 Applicable Law. This Plan shall be construed in
accordance with and governed by the laws of the Commonwealth of
Kentucky.
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9.6 Notices. For all purposes of this Plan, all
communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five business
days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of
the Company) at its principal executive office and to a
Participant at his or her principal residence, or to such other
address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9.7 Severability: Each section, subsection and lesser
section of this Plan constitutes a separate and distinct under-
taking, covenant and/or provision hereof. Whenever possible,
each provision of this Plan shall be interpreted in such manner
as to be effective and valid under applicable law. In the event
that any provision of this Plan shall finally be determined to be
unlawful, such provision shall be deemed severed from this Plan,
but every other provision of this Plan shall remain in full force
and effect, and in substitution for any such provision held
unlawful, there shall be substituted a provision of similar
import reflecting the original intention of the parties hereto to
the extent permissible under law.
9.8 Withholding of Taxes: The Company may withhold
from any amounts payable under this Plan all federal, state, city
and other taxes as shall be legally required.
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IN WITNESS WHEREOF, KU Energy Corporation has caused
this instrument to be executed in its name by its President and
its Corporate Seal to be hereunto affixed, attested by its
Secretary, on this 19th day of May, 1992.
KU ENERGY CORPORATION
By /s/ John T. Newton
President
[Corporate Seal]
ATTEST:
/s/ Michael R. Whitley
Secretary
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